For these stars, H1 profits higher than last full year

Mumbai: While rising raw material prices and pressure on demand squeezed Indian corporates, profits of about three dozen companies in the first-half of FY23 exceeded that of their previous full-year numbers.

Companies such as Chennai Petroleum, Dr. Reddy's Lab, GHCL, TTK Healthcare, GMDC, IRB Infrastructure, South Indian Bank, Jaiprakash Power, and Tata Coffee, among others, have made record profits in April-September of the current fiscal.

For instance, Chennai Petroleum reported ₹2,375 crore profit in the six-months ended September 2022 compared to ₹1,352 crore profits in FY22. Its six-month revenues were ₹42,671 crore compared to ₹43,375 crore in FY22. The stock has rallied 102% since January 1.


Textile and chemicals firm GHCL's profits in the first six months of FY23 stood at ₹648 crore as against ₹647 crore in FY22. Its revenues were ₹2,746 crore in April-June compared to ₹3,778 crore in FY22. The stock has gained 71% so far this year.

"Revenues grew strongly in H1FY23 as compared to FY22 annual revenues backed by benefits from low base, expanded capacities, higher realization and volume increase, and raw material inflation at peak level in Q1FY23," said Jitendra Upadhyay, analyst at Bonanza Portfolio Management. "With a recent correction in key input prices, raw material inflation is expected to cool off from Q2FY23 and this will help operating profit margin improve going forward."

Jaiprakash Power's profit during the period was ₹317 crore as against ₹107 crore in FY22.

Analysts said the challenge for these companies would be to maintain the profitability streak as investors will look whether the surge in earnings was on account of a one-off events or a revival in fortunes.

"Expectation is building up that the worst in business slowdown and fall in margins are behind us," said Vinod Nair, head of research at Geojit Financial Services. "Still, stock and sector performance continue to be specific based on valuations and Q2 result outcome, because there are segments which continue to be burdened by inflationary and selling pressure."

Corporate India's profits have bounced back smartly to levels of about 5% of GDP in FY22 after troughing out at 1.2% in FY20 following a decade-long profitability erosion phase.

According to G V Giri, president of IIFL Securities, GDP growth has resumed after an interruption from Covid, and if the momentum sustains, profit rebound at smaller companies should be disproportionate.